Reduce your exposure to US assets before they lose value, Pictet warns investors
Swiss private bank says structurally high inflation and government deficits will erode value of US dollar and Treasuries over the next decade
Investors should further reduce their exposure to US Treasuries and the US dollar over the next decade, as tech-driven inflation and high government deficits are likely to erode their value, a leading private bank has warned.
Shifting to commodities and equities in emerging markets offers a greater chance of long-term returns, with global inflation expected to remain volatile and sticky for years due to factors including the artificial intelligence (AI) boom and decarbonisation efforts, according to Pictet Wealth Management.
“Structurally higher inflation and government deficits reinforce the clear takeaway: buy assets that governments cannot print,” said Kelvin Tay, the Swiss bank’s chief investment officer in Asia.
Frederik Ducrozet, Pictet’s head of strategy and macroeconomic research, added that some clients had wanted to discuss currency hedging recently – a topic that had rarely been raised in the past.
“The summary is that you should be protected against something that the government should print and in a way devalue,” Ducrozet said during a briefing on Friday.